Thu. Sep 21st, 2023

VietNamNet Bridge – Foreign investors said they would cancel the plans to
expand their investment in Vietnam if the expanded projects cannot enjoy
investment incentives.

Vietnam, government, FDI, policy, encouragement

Hong Han Thanh, General Director of Pepperl + Fuchs Vietnam, the company which
specializes in making sensors and signal transmission equipment, said his
company has been running well with 100 engineers and 300 workers in the Tan
Thuan Export Processing Zone, with the investment capital of $11 million.

Pepperl + Fuchs plans to invest $30 million in the second factory, which it
thinks would employ 500 workers. However, the company has been told that it
would not be able to enjoy the investment incentives for the expanded investment
project, it considers canceling the project.

The same thing is occuring with Unilever Vietnam. A senior executive of teh
enterprise said Unilever has invested $200 million in Tay Bac Cu Chi industrial
zone and it plans to expand the factory here. However, the investor now
reconsiders the investment plan because it would not be given investment
incentives for the expanded project.

The executive said that if the investor cannot enjoy the investment incentives,
the competitiveness of the products would be lower. “It’s unreasonable that the
two projects of the same investor and in the same place bear the two different
tax schemes,” he said.

Businessmen all said that they have to think twice before deciding to expand
their investment scale in the context of the global economic crisis. Therefore,
the removal of the investment incentives would make them shrink back. Once the
incentives are not given more, the investment expansion would be canceled.

According to Nguyen Tan Dinh, Deputy Head of the HCM City Management Board of
Export Processing Zones and Industrial Zones. He heard similar complaints from
other investors, who cannot enjoy investment incentives for the expanded
investment projects after the corporate income tax took effect in January 2009.

Deputy Mayor of HCM City–Le Manh Ha, thinks that the foreign investors are
reasonable to ask for the same investment incentives for their expanded
projects.

“Why do the policies only offer incentives to new investors, not to the existing
investors who have been here in Vietnam for a long time and have big
contributions to the development of the national economy?” he questioned.

Tran Thi Le Nga from the HCM City Taxation Agency confirmed that she heard a lot
of complaints about the tax policies applied to expanded investment projects.

However, Nga said the problem would be settled, because the government’s
Resolution No. 2 says investors would enjoy the investment incentives for the
expanded investments as well. The resumption of the tax incentives would be
decided by the National Assembly, when the Ministry of Finance submits the draft
on the corporate income tax law amendment in upcoming May.

Nga said that if refering to the government’s resolution, the resumption of the
tax incentives would be in April 2013. Meanwhile, the draft law compiled by the
Ministry of Finance says the law would have the retroactivity, which means that
the tax incentives would be given to the expanded projects since January 1, 2009
as well.

The management agencies have released optimistic reports about the foreign
direct investment (FDI), saying that foreign investors registered the investment
projects worth $280 million in January 2013, an encouraging result in the
context of the FDI sharp fall worldwide.

However, analysts have pointed out that that FDI flow to Vietnam has been on the
decrease. They also said this should not be seen as an encouraging result at
all, if noting that the FDI flow to neighbouring ASEAN countries still keeps on
the rise.

Compiled by C. V

By vivian